Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1.
This act shall be known and may be cited as the "New Homebuyers' Bill of
Rights Act."

2. This act is remedial
legislation necessary for the protection of the new homebuyers of this State
against inequitable practices and contractual provisions and shall be liberally
construed to effectuate its purposes and intent.

3. The Legislature, noting
the salutary effect of “The New Home Warranty and Builders' Registration
Act," P.L.1977, c.467 (C.46:3B-1 et seq.), finds it to be in the public
interest that the principles of fairness underlying that act be applied to
other aspects of the relationship between the builders and buyers of new homes,
that the rights of both parties be clearly stated and adequately protected, and
that the volume of litigation arising out of this relationship be reduced
through utilization of alternate means of dispute resolution.

4. As used in this act,
"new homebuyer" means a person who enters into a contract with a
builder either to purchase a new home built or to be built on land owned or
controlled by the builder or to have a new home built by the builder on land
already owned by the homebuyer. Terms used in P.L. , c. (C. )
(pending before the Legislature as this bill) act that are defined in section 2
of P.L.1977, c.467 (C.46:3B-2) shall have the meanings set forth in that
section.

5. The Legislature declares
the following to be among the rights of new homebuyers:

a. A builder
shall not be permitted to increase the sales price of a new home during the
term of an executed contract unless:

(1) changes are
to be made to the new home at the request of the new homebuyer; or

(2) the increase
is based upon a contingency involving increased cost to the builder that was
expressly agreed to in the contract.

b. A new
homebuyer shall have the right to have a contract include a mortgage
contingency provision with a specified minimum mortgage loan amount, maximum
interest rate, minimum term, maximum amount of points and other lender fees,
and reasonable amount of time in which to obtain a mortgage loan. A new
homebuyer shall also be allowed to make application to any mortgage lender
licensed to do business in New Jersey.

c. A new
homebuyer shall be entitled to have funds held in escrow at closing for any
incomplete items, and any incomplete item noted at closing for which no escrow
fund is held shall be deemed to be a defect, which the builder shall be
required to correct pursuant to “The New Home Warranty and Builders'
Registration Act," P.L.1977, c.467 (C.46:3B-1 et seq.). The escrowing of
funds shall not impair the right of a new homebuyer to file a request for
warranty performance for defects in other areas of the home.

d. All new
homebuyer deposit moneys shall be held in escrow to ensure the return of
deposit moneys in the event of builder default.

e. A new
homebuyer shall have the right to cancel a new home contract if thebuilder fails to
complete and deliver the new home in accordance with the provisions set forth
in this subsection.

(1) Every new
home contract shall set forth a closing date by which construction of the new
home is anticipated to be substantially completed.

(a) Substantial
completion of the construction of a new home shall be evidenced by the issuance
of a certificate of occupancy.

(b) A new home
contract may provide that issuance of a temporary certificate of occupancy
shall evidence substantial completion of the construction of a new home as long
as:

(i) the
incomplete work does not affect the habitability of the new home;

(ii) the contract
requires the execution of an agreement setting forth an outside date for the
completion of construction and the issuance of a certificate of occupancy; and

(iii) the
contract provides for the establishment of an escrow fund at closing sufficient
to ensure performance under the contract or, in case of default, afford the new
homebuyer sufficient resources to complete construction.

(c) The parties
may negotiate either an acceleration or a postponement of the closing date,
which shall be set forth in writing and signed by the builder and the new
homebuyer.

(2) In the event
substantial completion of construction and closing is delayed due to causes
beyond the control of the builder, including delays attributable to the issuance
of a permit, the completion of an inspection, inclement weather, emergency, or
the unavailability of workmen or materials, the closing date may be extended
for the period of time lost by the builder by reason of any or all of the
foregoing causes; however, the extension period shall not exceed 90 days.

(3) (a) If the
builder is unable to close on the closing date set forth in the original
contract, a date changed by agreement pursuant to paragraph (1) of this
subsection, or a delayed date permitted by paragraph (2) of this subsection,
the new homebuyer may make time of the essence by providing written notice to
the builder that, unless closing occurs on a date specified in the notice, the
builder shall be in default of the contract.

(b) A time of the
essence notice shall afford the builder reasonable time to prepare for the
closing. Absent extraordinary circumstances, 14 days’ notice shall be
considered a reasonable notice period.

(c) If
construction of the new home is not substantially complete and the builder does
not close on the date specified in the notice, the builder shall be in default
of the contract. The contract shall be deemed breached by reason of the
default, forfeiting the builder’s rights under the contract, and subjecting the
builder to responsibility for all loses and damages sustained or incurred by
the new homebuyer as a result of the failure to close, including but not
limited to forfeiture of all moneys paid by the new homebuyer to the builder.

f. A new
homebuyer shall have the option to have any dispute with a builder resolved
through an alternate dispute resolution procedure authorized by the
commissioner by rule. In the event that the dispute is resolved in favor of a
new homebuyer, the builder shall comply with that determination. A new home
contract shall not require a new homebuyer to give up the right to pursue
redress through a warranty or through litigation with regard to the contract or
defects of any type.

g. A new
homebuyer shall have the right to make progress inspections during construction
and during the pre-closing period or to have inspections made by an engineer or
home inspection company designated by the new homebuyer.

h. A new
homebuyer shall be entitled to receive, without cost, a copy of the plans and
specifications for the new home. Such plans and specifications shall be a part
of the contract and shall not be subject to change without the written
agreement of both the new homebuyer and the builder.

i. The
enumeration in this section of certain rights shall not be construed to limit
or disparage any other legal or equitable rights of new homebuyers.

6. The commissioner shall publish,
make available for distribution, and post on the Internet a document entitled
the “New Homebuyer Bill of Rights,” setting forth the new homebuyer rights
expressed in section 5 of this act, and also including therein specifications
based upon the following:

a. a statement explaining the
statutory and regulatory responsibilities of new home builders under the
"State Uniform Construction Code Act," P.L.1975, c.217 (C.52:27D-119
et seq.), "The New Home Warranty and Builders' Registration Act,"
P.L.1977, c.467 (C.46:3B-1 et seq.), "The Planned Real Estate Development
Full Disclosure Act," P.L.1977, c.419 (C.45:22A-21 et seq.), and any and
all other statutes and regulations applicable to transactions between builders
and homebuyers;

b. a statement advising the
new homebuyer of the right to attorney review of the contract;

c. a description of a new
homebuyer’s right of access to local construction office files to obtain
information concerning the new home and its builder;

d. a description of the
contents of a typical complete new home construction file;

e. a brief and plain language
explanation of the scope and purpose of the "State Uniform Construction
Code Act," P.L.1975, c.217 (C.52:27D-119 et seq.), "The New Home
Warranty and Builders' Registration Act," P.L.1977, c.467 (C.46:3B-1 et
seq.), "The Planned Real Estate Development Full Disclosure Act,"
P.L.1977, c.419 (C.45:22A-21 et seq.), and other laws and regulations designed
to protect new homebuyers which new home builders, inspectors, arbitrators, and
warranty providers are charged with following and enforcing.

7. Every contract prepared by
or on behalf of a builder shall have a copy of the “New Homebuyer Bill of
Rights” produced pursuant to section 6 of this act appended thereto or included
therein.

8. The commissioner shall,
not later than 120 days following the closing date on a warranted new home,
mail to the new homeowner a notice containing:

a. a description of new
homebuyer rights and responsibilities in the warranty process,

b. an outline of the
statutory periods of warranty coverage and an explanation of the types of
defects covered under each warranty period,

c. an explicit description of
the steps that new homebuyers should follow to protect their interests,

d. a warning to alert new
homebuyers of the importance of adhering to warranty deadlines and advise ways
to recognize “lulling” and other delaying tactics,

e. a description of a new
homebuyer’s rights and responsibilities in arbitration and an explanation of
how to proceed if the homebuyer believes that an arbitration award was biased
or incompetent, and,

f. such additional
information as the commissioner may deem to be appropriate and necessary in
order to enable new homebuyers to better understand and protect their rights.

9. The commissioner shall
promulgate rules as may be necessary to implement this act.

10. A violation of any
provision of this act shall be deemed to be a violation of “The New Home
Warranty and Builders' Registration Act," P.L.1977, c.467 (C.46:3B-1 et
seq.).

11. This act shall take
effective immediately.

STATEMENT

This bill would establish a
Bill of Rights for buyers of new homes and would require every contract for the
purchase of a new home to set forth these rights. The bill combines several of
the recommendations contained in the State Commission of Investigation’s March,
2005 report entitled “The Good, the Bad and the Ugly: New Home Construction in
New Jersey.”

The Bill of Rights would
protect new homebuyers by:

-Prohibiting increases in the
sales price of a new home without the agreement of the homebuyer;

-Ensuring a fair and realistic
opportunity to seek mortgage financing;

-Allowing homebuyers to
require the holding of escrows for items that are incomplete;

-Making it clear that
incomplete items noted at closing for which no escrow fund is held are defects
that the builder is required to correct;

-Requiring that deposit funds
must be held in escrow;

-Allowing buyers to cancel a new
home contract if the builder fails to complete and deliver the new home in
accordance with the bill’s requirements;

-Affording new homebuyer’s the
option to have disputes with builders submitted to alternate dispute resolution
procedures;

-Specifying a new homebuyer’s
right to conduct progress inspections;

-Allowing a homebuyer to
receive, without charge, a copy of the plans and specifications for the new
home;

-Specifying that the plans and
specifications can only be changed with the consent of both the homebuyer and
the builder; and

-Providing that the
enumeration of these rights does not limit any other legal or equitable rights
of new homebuyers.

Additionally, the bill directs
the Commissioner of Community Affairs to publish, make available for
distribution, and post on the Internet a document entitled the “New Homebuyer
Bill of Rights” setting forth those rights as well as additional rights, to be
refined by the commissioner based upon the following:

-A statement explaining the
statutory and regulatory responsibilities of new home builders;

-A statement advising the new
homebuyer of the right to attorney review of the contract;

-A description of a new homebuyer’s
right of access to local construction office files;

-A description of the contents
of a typical complete new home construction file; and

-A brief and plain language
explanation of the laws and regulations designed to protect new homebuyers which
new home builders, inspectors, arbitrators, and warranty providers are charged
with following and enforcing.

The bill would require the
Commissioner of Community Affairs to mail a notice to a new homebuyer within
120 days following the closing date on a new warranted home. The notice would
contain:

-A description of new
homebuyer rights and responsibilities in the warranty process;

-An outline of the statutory
periods of warranty coverage and an explanation of the types of defects covered
under each warranty period;

-An explicit description of
the steps that new homebuyers should follow to protect their interests;

-A warning to alert new
homebuyers of the importance of adhering to warranty deadlines and advise ways
to recognize “lulling” and other delaying tactics;

-A description of a new
homebuyer’s rights and responsibilities in arbitration and an explanation of
how to proceed if the homebuyer believes that an arbitration award was biased
or incompetent; and

-Other information the
commissioner may deem necessary and appropriate to enable new homebuyers to
protect their rights.

Violations of this bill would
be deemed to be a violation of "The New Home Warranty and Builders'
Registration Act" and therefore subject the violator to the sanctions of revocation
or suspension.